In this article
- What is sales tax in Kentucky?
- What is taxable in Kentucky?
- Exemptions and resale certificates in Kentucky
- Who must collect sales tax in Kentucky?
- Sales tax rates in Kentucky
- How to calculate sales tax in Kentucky
- How to register for a Kentucky sales tax permit
- Filing and payment in Kentucky
- Penalties and compliance risks in Kentucky
- How Quaderno helps with Kentucky sales tax
- Sales tax guides for neighboring states
Kentucky has a flat 6% statewide sales tax with no additional local taxes. You must register and collect sales tax if your annual sales into Kentucky exceed $100,000 or you make 200 or more separate transactions. SaaS became taxable in Kentucky on January 1, 2023, under House Bill 8.
Whether you sell software, physical goods, or digital content into the Bluegrass State, this guide covers everything you need to know — rates, taxability, nexus rules, registration, and filing.
What is sales tax in Kentucky?
Kentucky imposes a 6% statewide sales tax on most retail sales of tangible personal property and certain taxable services. Unlike many US states, Kentucky has no county, city, or district-level sales taxes — the same flat 6% rate applies everywhere in the state.
Kentucky uses a destination-based sales tax system, meaning you charge tax based on the buyer's location. Because the rate is uniform statewide, you simply apply 6% to all taxable Kentucky sales.
What is taxable in Kentucky?
Kentucky taxes most retail sales of tangible personal property. In 2022, Kentucky significantly expanded its sales tax base through House Bill 8 (HB8), which added many services to the list of taxable items effective January 1, 2023. Always verify with the Kentucky Department of Revenue for your specific product or service category.
Digital products and SaaS taxability in Kentucky
The most important change for digital businesses is the 2023 expansion of Kentucky sales tax to SaaS:
- SaaS: Taxable since January 1, 2023, under House Bill 8. If you sell SaaS to Kentucky customers, you must collect the 6% sales tax on all subscriptions sold on or after that date.
- Downloaded software: Has been taxable in Kentucky for many years.
- Digital products (e-books, downloaded audio, downloaded video): Taxable at 6%.
- Streaming services: Taxable as part of the expanded service categories under HB8.
The HB8 expansion means Kentucky is now aligned with states like Massachusetts and Pennsylvania in taxing SaaS — if you updated your sales tax collection when HB8 took effect, you are compliant. If not, review your sales records from January 1, 2023 onward.
Sales tax on shipping charges in Kentucky
Kentucky taxes shipping and handling charges when the goods being shipped are themselves taxable. If the item is exempt, the shipping charge is also generally exempt.
Exemptions and resale certificates in Kentucky
Kentucky provides several sales tax exemptions. Key non-taxable items include:
- Most groceries and food for home consumption
- Prescription drugs and certain medical equipment
- Agricultural products, equipment, and supplies
- Manufacturing machinery and equipment used in production
- Items purchased for resale, with a valid Kentucky Resale Certificate (Form 51A105)
- Sales to qualifying exempt organizations
See the Kentucky Department of Revenue for current exemption certificate forms and the full exemption list.
Who must collect sales tax in Kentucky?
Nexus is the legal connection between your business and Kentucky that creates a sales tax obligation. If you have nexus, you must register, collect, and remit sales tax on taxable Kentucky sales.
Economic nexus in Kentucky
You have economic nexus in Kentucky if your sales into the state exceed $100,000 in annual sales or 200 or more separate transactions in the current or previous calendar year, whichever you reach first.
To learn more, see the Ultimate Guide to US Economic Nexus.
Physical nexus in Kentucky
| Type of nexus | Definition |
|---|---|
| Physical presence | Having a store, office, warehouse, distribution center, or other business location in Kentucky. |
| Employees or representatives | Having employees, agents, or contractors working on your behalf in Kentucky. |
| Inventory | Storing inventory in Kentucky, including through a third-party warehouse or fulfillment center. |
| Leasing property | Owning or leasing real or tangible personal property within Kentucky. |
| Delivery of goods | Regularly delivering goods into Kentucky using your own vehicles. |
Marketplace facilitator rules in Kentucky
Marketplace facilitators in Kentucky are required to collect, report, and remit sales tax on behalf of marketplace sellers. Sales through qualifying marketplaces do not count toward your $100,000 or 200-transaction economic nexus threshold.
See our state-by-state guide to marketplace facilitator laws for more information.
Sales tax rates in Kentucky
Kentucky has a single, uniform 6% statewide rate with no local additions.
How Kentucky sales tax is structured
| Level | Description |
|---|---|
| State sales tax | The statewide rate is 6%, applied uniformly across all of Kentucky. |
| County tax | Kentucky does not have county-level sales taxes. |
| City tax | Kentucky does not have city-level sales taxes. |
Kentucky sales tax by city
Because Kentucky has a flat statewide rate, the same 6% applies whether your customer is in Louisville, Lexington, Bowling Green, Owensboro, or anywhere else in the state. There are no local surcharges.
How to calculate sales tax in Kentucky
Kentucky is one of the simplest states to calculate sales tax for: apply the flat 6% rate to all taxable sales, regardless of the customer's city or county.
Example: You sell a $100/month SaaS subscription to a business in Louisville. Since SaaS became taxable in Kentucky on January 1, 2023, you collect 6% — $6 in sales tax, making the total $106.
Use Quaderno's Sales Tax Calculator to confirm the rate for any Kentucky address.
How to register for a Kentucky sales tax permit
If your business has nexus in Kentucky, register before collecting sales tax. Register online through the Kentucky Taxpayer Portal (KTP). Once registered, you can file returns and make payments through the same portal.
For a step-by-step walkthrough of the registration process, see the Kentucky Sales Tax Registration Guide.
Filing and payment in Kentucky
How often do you file sales tax in Kentucky?
Kentucky assigns your filing frequency at registration based on your expected sales volume — monthly, quarterly, or annually. Higher-volume sellers typically file monthly.
When are Kentucky sales tax returns due?
Returns are generally due on the 20th of the month following the close of the reporting period. If the 20th falls on a weekend or holiday, the return is due the next business day.
How to file and pay Kentucky sales tax
File and pay online through the Kentucky Taxpayer Portal. As of May 2025, electronic filing is required for all registered sales tax filers in Kentucky. Kentucky requires a return for every assigned period — zero returns are required even if you had no taxable sales.
For step-by-step filing instructions, see the Kentucky Sales Tax Filing Guide.
Penalties and compliance risks in Kentucky
Late filing or payment triggers penalties and interest. Common compliance risks in Kentucky:
- Not updating your tax collection for SaaS after January 1, 2023 — if you were not collecting Kentucky sales tax on SaaS after that date, you may have under-collected and created back-tax liability.
- Assuming no local taxes means simple compliance — while Kentucky has no local taxes, staying on top of the updated taxability rules from HB8 is important.
- Missing zero return requirements — failure to file even when you owe nothing results in penalties.
For penalty details, see the Kentucky Department of Revenue.
How Quaderno helps with Kentucky sales tax
Quaderno automatically calculates the correct 6% Kentucky rate for every sale, applies the right taxability rules for SaaS under HB8, and keeps your records organized. Stop worrying about compliance and focus on growing your business.
Sales tax guides for neighboring states
If you sell across the South or Midwest, you may have sales tax obligations in these states too.
Note: At Quaderno we love providing helpful information and best practices about taxes, but we are not certified tax advisors. For further help, or if you are ever in doubt, please consult a professional tax advisor or the tax authorities.